Unilever has announced the sale of its North American laundry business. Keith Weed, Gobal VP, Homecare & Hygiene, discusses the thinking behind the sale.
Laurie Mayer
Keith, the North American laundry business, a key, major market, by your own admission it was a healthy business, so the first question must be, why on earth have you sold?
Keith Weed
Well, it was our decision to do it and, indeed, our decision to do it now. It's a good thing for Unilever and a good thing for Unilever's laundry business. We have a very big laundry business globally. More than 5 billion euros. We sell more than 7 million washes every half an hour. However, our business in the States is sub-scale. We've used that size to our advantage in a sort of David and Goliath battle with the leader. But on a sustained business going forward, this market needs to consolidate and, through the consolidation, be more effective to compete.
Laurie Mayer
Isn't the plain fact of the matter that Procter & Gamble had a stranglehold on the market? You've just cut and run when you could have invested more? Or you could have found a partner to eat into market share?
Keith Weed
Well, at the end of the day it's about choices and the choice that we have made is we have better investment opportunities elsewhere in the world. We're very committed to this market. It's one of our foundation categories and in the lifeblood of Unilever. The removal of the North American business, a slower growth business, actually removes the drag from our business. We have other areas of investment with more attractive opportunities from our perspective in laundry around the world, where we’d prefer to put our emphasis, our focus and our resource.
Laurie Mayer
What does it say about your commitment to the North American market? Are consumers and customers there going to be able to have access to a full range of product now the sale's gone through?
Keith Weed
Very much so. As far as a customer, retailer or a consumer, our products will be on sale along with the products of the acquirer. And together that will be managed as a bigger, more-scale business, a more competitive business in the North American market.
Laurie Mayer
So what sort of opportunities have now opened up now that you can focus resources on more profitable areas?
Keith Weed
This has been well planned for some time. So, we've already moved, for instance, the liquid detergent programme, our R&D programme, across to Europe. We've increased the research and development resource in Mumbai in India. Last year I put in 75 new scientists there. And the actions that have been taken are well in place and we're well prepared for the new business focusing on Europe and the developing and emerging markets.
Laurie Mayer
Looking back, should you have got out of North America perhaps earlier? Were you wrong to stay there as long as you did?
Keith Weed
Timing's important in business and this is the right time. It's a decision about moving right now when the business has good momentum. We've had a very good business momentum in the US. We have been a major innovator. We've led the concentration agenda with ‘All Small & Mighty’. The whole of the market is now moving into concentration with benefits to consumers, to retailers and to the industry as a whole. And importantly, a very strong environmental story where we now have concentrated products. Now's a great time to sell with the business in good shape and it's time for the next phase of development for the new owners in the States.
Laurie Mayer
So is it really possible to manage a global platform when there's a huge area missing?
Keith Weed
We have huge scale. As I said, we are the leaders in the developing and emerging markets. We have an 80% share in South Africa, over 60% share in Thailand, 80% share in Vietnam, 70% share in Brazil. And if you come across to Europe, we're the brand leader in the UK, for example. So many very strong positions. We're committed to this market. We are a major innovator. We've led innovations year after year from tablets and capsules, through to concentrated liquids. We have a very strong sustainability programme as well. We feel very confident about this market. It's the right thing to do. It's the right thing for Unilever. It's the right thing for the consumers and the retailers, and, of course, our shareholders.
Laurie Mayer
Keith Weed, thank you very much indeed.
Keith Weed
Thank you.
